China’s emergence as an excellent economic power has induced an epochal shift in patterns of world commerce. Simultaneously, it has challenged a lot of the acquired empirical wisdom about how labor markets adjust to commerce shocks. Alongside the heralded consumer advantages of expanded trade are substantial adjustment costs and distributional penalties. These impacts are most seen within the native labor markets in which the industries exposed to international competition are concentrated. Adjustment in local labor markets is remarkably gradual, with wages and labor-force participation charges remaining depressed and unemployment rates remaining elevated for at least a full decade after the China commerce shock commences.
